NEW HAVEN, Conn.--(BUSINESS WIRE)--Alexion Pharmaceuticals, Inc. (NASDAQ: ALXN) today announced financial
results for the fourth quarter and full year of 2016. Total revenues for
the full year of 2016 were $3.084 billion, an 18 percent increase
compared to 2015. The negative impact of foreign currency on total
revenue year over year was 3 percent or $74 million, net of hedging
activities. On a GAAP basis, diluted earnings per share (EPS) for the
full year of 2016 was $1.76 per share, compared to $0.67 per share in
2015. Non-GAAP diluted EPS for the full year of 2016 was $4.62 per
share. Non-GAAP diluted EPS was $4.65 per share for the full year of
2015, reflecting a reduction of $0.34 per share to conform to the
current non-GAAP income tax expense definition.

Total revenues in the fourth quarter grew to $831 million, a 19 percent
increase compared to the same period in 2015. The negative impact of
foreign currency on total revenue in the fourth quarter was 2 percent or
$12 million, net of hedging activities. On a GAAP basis, diluted EPS for
the fourth quarter of 2016 was $0.41 per share, compared to $0.29 per
share in the fourth quarter of 2015. Non-GAAP diluted EPS for the fourth
quarter of 2016 was $1.26 per share. Non-GAAP diluted EPS was $1.04 per
share in the fourth quarter of 2015, reflecting a reduction of $0.09 per
share to conform to the current non-GAAP income tax expense definition.
Both GAAP and non-GAAP results are inclusive of legal, accounting, and
other costs associated with the Audit and Finance Committee's completed
investigation.

"In 2016 the global Alexion team delivered on our patient-centered
objectives as we grew our leadership in complement by serving more
patients with PNH and aHUS, and continued to build our metabolic
franchise with the global launches of Strensiq and Kanuma. We also
achieved important regulatory milestones towards new indications for
Soliris and initiated two registration studies for ALXN1210 to drive our
future growth," said David Brennan, Interim Chief Executive Officer of
Alexion. "Our 2017 guidance reflects double-digit revenue and EPS growth
as we continue to grow our complement and metabolic franchises, prepare
for the potential launches of Soliris in refractory gMG, and focus on
our highest priority R&D programs."

GAAP R&D expense was $757 million, compared to $709 million in 2015.
Non-GAAP R&D expense was $690 million, compared to $515 million in
2015.

GAAP SG&A expense was $954 million, compared to $863 million in 2015.
Non-GAAP SG&A expense was $830 million, compared to $707 million in
2015.

GAAP diluted EPS was $1.76 per share, compared to $0.67 per share in
2015. Non-GAAP diluted EPS was $4.62 per share. Non-GAAP diluted EPS
was $4.65 per share in 2015, reflecting a reduction of $0.34 per share
to conform to the current non-GAAP income tax expense definition.

Fourth Quarter 2016 Financial Highlights

Soliris® net product sales were $749 million, compared to
$689 million in the fourth quarter of 2015.

Strensiq® net product sales were $71 million, compared to
$12 million in the fourth quarter of 2015.

Kanuma® net product sales were $11 million.

GAAP R&D expense was $206 million, compared to $191 million in the
same quarter last year. Non-GAAP R&D expense was $186 million,
compared to $155 million in the same quarter last year.

GAAP SG&A expense was $259 million, compared to $242 million in the
same quarter last year. Non-GAAP SG&A expense was $234 million,
compared to $198 million in the same quarter last year.

GAAP diluted EPS was $0.41 per share, compared to $0.29 per share in
the same quarter last year. Non-GAAP diluted EPS was $1.26 per share.
Non-GAAP diluted EPS was $1.04 per share in the fourth quarter of
2015, reflecting a reduction of $0.09 per share to conform to the
current non-GAAP income tax expense definition.

During the fourth quarter, the Company recognized an impairment charge
of $85 million related to SBC-103, an early stage, clinical
indefinite-lived intangible asset from the Synageva acquisition. This
charge was taken as a result of a strategic evaluation of the asset,
increases in the development and commercial timelines, and updated
cash flows. In February 2017, Alexion decided to reduce its investment
in SBC-103. Patients currently enrolled in the Phase 1/2 trial will
continue to receive SBC-103, and no additional Alexion studies are
planned. Alexion will reassess the value of this asset on a go forward
basis.

Share Repurchase Authorization

The Company also announced that its Board of Directors has increased the
size of the Company's share repurchase authorization to a total of $1
billion. The Board’s authorization is open-ended.

Product and Pipeline Updates

Complement Portfolio

Eculizumab- Refractory Generalized Myasthenia Gravis (gMG): Alexion
has filed regulatory submissions for eculizumab for the treatment of
patients with refractory gMG in both the United States and Europe.

Eculizumab- Delayed Graft Function (DGF): In December 2016,
Alexion announced thatthe PROTECT study, a single,
multinational, placebo-controlled trial of eculizumab in the
prevention of DGF, did not meet its primary endpoint.

ALXN1210- PNH: Patients are being dosed in a Phase 3 trial
comparing ALXN1210 administered intravenously every eight weeks to
Soliris in complement inhibitor treatment-naive patients with PNH. To
broaden the PNH program, Alexion is also initiating a Phase 3 PNH
switch study of ALXN1210 administered intravenously every eight weeks
compared to patients currently treated with Soliris. Alexion expects
to complete enrollment in both studies in 2017.

ALXN1210- aHUS: Recruitment is underway in a Phase 3 trial with
ALXN1210 administered intravenously every eight weeks in complement
inhibitor treatment-naive adolescent and adult patients with aHUS.
Enrollment is expected to be complete in 2017. Alexion expects to
initiate a Phase 3 trial of ALXN1210 in pediatric patients with aHUS
in the second quarter of 2017.

ALXN1210- Subcutaneous: Alexion has completed enrollment in a
Phase 1 study of a new formulation of ALXN1210 administered
subcutaneously in healthy volunteers.

Metabolic Portfolio

SBC-103: In February 2017, Alexion decided to reduce its
investment in SBC-103, a recombinant form of the NAGLU enzyme being
evaluated in patients with mucopolysaccharidosis IIIB, or MPS IIIB.
Patients currently enrolled in the Phase 1/2 study will continue to
receive SBC-103, and no additional Alexion studies are planned.

Samalizumab (ALXN6000): Samalizumab is a first-in-class
immunomodulatory humanized monoclonal antibody that blocks the key
immune checkpoint protein, CD200. Alexion has initiated a Phase 1
study of samalizumab in patients with advanced solid tumors. Patients
are also being dosed in The Leukemia and Lymphoma Society's BEAT AML
Master Trial, a multi-arm clinical trial, which is evaluating
samalizumab as well as other potential therapies for the treatment of
acute myeloid leukemia (AML).

2017 Financial Guidance

GAAP Guidance

Non-GAAP Guidance

Total revenues

$3,400 to $3,500 million

$3,400 to $3,500 million

Soliris revenues

$3,025 to $3,100 million

$3,025 to $3,100 million

Metabolic revenues

$375 to $400 million

$375 to $400 million

Research and development expense (% total revenues)

24% to 27%

22% to 23%

Selling, general and administrative expense (% total revenues)

29% to 30%

25% to 26%

Operating margin

25% to 28%

43% to 44%

Earnings per share

$2.55 to $3.05

$5.00 to $5.25

Alexion’s 2017 financial guidance is based on current foreign exchange
rates net of hedging activities and does not include the effect of
business combinations, license and collaboration agreements, asset
acquisitions, intangible asset impairments, changes in fair value of
contingent consideration or restructuring activity that may occur after
the day prior to the date of this press release.

Conference Call/Webcast Information:

Alexion will host a conference call/audio webcast to discuss the fourth
quarter and full year 2016 results, at 10:00 a.m. Eastern Time. To
participate in the call, dial 877-681-3372 (USA) or 719-325-4794
(International), passcode 5877612 shortly before 10:00 a.m. Eastern
Time. A replay of the call will be available for a limited period
following the call. The replay number is 888-203-1112 (USA) or
719-457-0820 (International), passcode 5877612. The audio webcast can be
accessed on the Investor page of Alexion’s website at: http://ir.alexionpharm.com.

About Alexion

Alexion is a global biopharmaceutical company focused on developing and
delivering life-transforming therapies for patients with devastating and
rare disorders. Alexion is the global leader in complement inhibition
and has developed and commercializes the first and only approved
complement inhibitor to treat patients with paroxysmal nocturnal
hemoglobinuria (PNH) and atypical hemolytic uremic syndrome (aHUS), two
life-threatening ultra-rare disorders. In addition, Alexion’s metabolic
franchise includes two highly innovative enzyme replacement therapies
for patients with life-threatening and ultra-rare disorders,
hypophosphatasia (HPP) and lysosomal acid lipase deficiency (LAL-D).
Alexion is advancing its rare disease pipeline with highly innovative
product candidates in multiple therapeutic areas. This press release and
further information about Alexion can be found at: www.alexion.com.

[ALXN-E]

This press release contains forward-looking statements, including
statements related to guidance regarding anticipated financial results
for 2017, assessment of the Company's commercialization efforts and
commercial potential for Soliris, Strensiq and Kanuma, medical and
commercial potential of each of Alexion's product candidates, launch
expectations for Strensiq and Kanuma, and plans for regulatory filings
and clinical programs for our product candidates. Forward-looking
statements are subject to factors that may cause Alexion's results and
plans to differ from those expected, including for example, decisions of
regulatory authorities regarding the adequacy of our research, marketing
approval or material limitations on the marketing of our products,
delays, interruptions or failures in the manufacture and supply of our
products and our product candidates,failure to satisfactorily
address matters raised by the FDA and other regulatory agencies, the
possibility that results of clinical trials are not predictive of safety
and efficacy results of our products in broader patient populations, the
possibility that current rates of adoption of Soliris in PNH, aHUS or
other diseases are not sustained, the possibility that clinical trials
of our product candidates could be delayed,the adequacy of our
pharmacovigilance and drug safety reporting processes, the risk that
third party payors (including governmental agencies) will not reimburse
or continue to reimburse for the use of our products at acceptable rates
or at all, risks regarding government investigations, including
investigations of Alexion by the SEC and DOJ, the risk that anticipated
regulatory filings are delayed, the risk that estimates regarding the
number of patients with PNH, aHUS, HPP and LAL-D are inaccurate, the
risks of shifting foreign exchange rates, and a variety of other risks
set forth from time to time in Alexion's filings with the U.S.
Securities and Exchange Commission, including but not limited to the
risks discussed in Alexion's Quarterly Report on Form 10-Q for the
period ended September 30, 2016 and in our other filings with the U.S.
Securities and Exchange Commission. Alexion does not intend to update
any of these forward-looking statements to reflect events or
circumstances after the date hereof, except when a duty arises under law.

In addition to financial information prepared in accordance with
GAAP, this press release also contains non-GAAP financial measures that
Alexion believes, when considered together with the GAAP information,
provide investors and management with supplemental information relating
to performance, trends and prospects that promote a more complete
understanding of our operating results and financial position during
different periods. The non-GAAP results exclude the impact of the
following GAAP items: share-based compensation expense, fair value
adjustment of inventory acquired, amortization of purchased intangible
assets, changes in fair value of contingent consideration,
acquisition-related costs, restructuring expenses, upfront and milestone
payments related to licenses and collaborations, impairment of
intangible assets and adjustments to income tax expense. These non-GAAP
financial measures are not intended to be considered in isolation or as
a substitute for, or superior to, the financial measures prepared and
presented in accordance with GAAP and should be reviewed in conjunction
with the relevant GAAP financial measures. Please refer to the attached
Reconciliations of GAAP to non-GAAP 2016 Financial Results and GAAP to
non-GAAP 2017 Financial Guidance for explanations of the amounts
adjusted to arrive at non-GAAP net income and non-GAAP earnings per
share amounts for the three and twelve month periods ended December 31,
2016 and 2015 and projected twelve months ended December 31, 2017.

(Tables Follow)

ALEXION PHARMACEUTICALS, INC.

TABLE 1: CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share amounts)

(unaudited)

Three months ended

Twelve months ended

December 31

December 31

2016

2015

2016

2015

Net product sales

$

831

$

701

$

3,082

$

2,603

Other revenue

-

-

2

1

Total revenues

831

701

3,084

2,604

Cost of sales

68

58

258

233

Operating expenses:

Research and development

206

191

757

709

Selling, general and administrative

259

242

954

863

Amortization of purchased intangible assets

80

80

322

117

Change in fair value of contingent consideration

5

19

36

64

Acquisition-related costs

-

3

2

39

Restructuring expenses

1

11

3

42

Impairment of intangible assets

85

-

85

-

Total operating expenses

636

546

2,159

1,834

Operating income

127

97

667

537

Other income and expense:

Investment income

3

1

11

8

Interest expense

(25

)

(23

)

(97

)

(48

)

Foreign currency (loss) gain

(1

)

(1

)

(5

)

1

Income before income taxes

104

74

576

498

Income tax expense

11

7

177

354

Net income

$

93

$

67

$

399

$

144

Earnings per common share

Basic

$

0.41

$

0.30

$

1.78

$

0.68

Diluted

$

0.41

$

0.29

$

1.76

$

0.67

Shares used in computing earnings per common share

Basic

225

225

224

213

Diluted

226

228

227

216

ALEXION PHARMACEUTICALS, INC.

TABLE 2: RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS

(in millions, except per share amounts)

(unaudited)

Three months ended

Twelve months ended

December 31

December 31

2016

2015

2016

2015

GAAP net income

$

93

$

67

$

399

$

144

Before tax adjustments:

Cost of sales:

Share-based compensation

3

3

11

7

Fair value adjustment of inventory acquired (1)

2

-

11

-

Research and development expense:

Share-based compensation

14

21

57

64

Upfront and milestone payments related to license and collaboration
agreements

6

15

10

130

Selling, general and administrative expense:

Share-based compensation

25

44

124

156

Amortization of purchased intangible assets (2)

80

80

322

117

Change in fair value of contingent consideration

5

18

36

64

Acquisition-related costs (3)

-

3

2

39

Restructuring expenses

1

12

3

42

Impairment of intangible assets (4)

85

-

85

-

Adjustments to income tax expense (5) (6)

(27

)

(23

)

(6

)

251

Non-GAAP net income

$

287

$

240

$

1,054

$

1,014

GAAP earnings per share - diluted

$

0.41

$

0.29

$

1.76

$

0.67

Non-GAAP earnings per share - diluted (6)

$

1.26

$

1.04

$

4.62

$

4.65

Shares used in computing diluted earnings per share (GAAP)

226

228

227

216

Shares used in computing diluted earnings per share (non-GAAP)

228

230

228

218

(1)

Inventory fair value adjustment associated with the amortization of
Kanuma inventory step-up related to the purchase accounting for
Synageva.

(2)

In the third quarter of 2015, the Company initiated amortization of
its purchased intangible assets due to the regulatory approvals for
Strensiq and Kanuma.

(3)

The following table summarizes acquisition-related costs:

Three months ended

Twelve months ended

December 31

December 31

2016

2015

2016

2015

Acquisition-related costs:

Transaction costs

$

-

$

-

$

-

$

27

Integration costs

-

3

2

12

$

-

$

3

$

2

$

39

(4)

During the fourth quarter of 2016, the Company recognized an
impairment charge related to SBC-103, an early stage, clinical
indefinite-lived intangible asset related to the Synageva
acquisition.

(5)

Alexion's non-GAAP income tax expense definition excludes the tax
effect of pre-tax adjustments to GAAP net income and intercompany
transactions with our captive foreign partnership which would become
due and payable only upon liquidation of a substantial portion of
our non-US business interests.

(6)

Previously reported non-GAAP tax expense and diluted EPS have been
modified to conform to the current non-GAAP income tax definition
adopted in Q2 2016. Previously reported non-GAAP EPS was $1.13 and
$4.99 for the three and twelve months ended December 31, 2015,
respectively.

ALEXION PHARMACEUTICALS, INC.

TABLE 3: RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL GUIDANCE

(in millions, except per share amounts and percentages)

(unaudited)

Twelve months ended

December 31, 2017

Low

High

GAAP net income

$

578

$

692

Before tax adjustments:

Share-based compensation

231

207

Fair value adjustment in inventory acquired

5

5

Upfront and milestone payments related to licenses and collaborations

51

—

Amortization of purchased intangible assets

320

320

Change in fair value of contingent consideration

14

14

Adjustments to income tax expense

(54

)

(36

)

Non-GAAP net income

$

1,145

$

1,202

Diluted GAAP earnings per share

$

2.55

$

3.05

Diluted Non-GAAP earnings per share

$

5.00

$

5.25

Operating expense and margin (% total revenues)

GAAP research and development expense

27

%

24

%

Share-based compensation

(3

)%

(2

)%

Upfront and milestone payments related to licenses and collaborations

(1

)%

0

%

Non-GAAP research and development expense

23

%

22

%

GAAP selling, general and administrative expense

30

%

29

%

Share-based compensation

(4

)%

(4

)%

Non-GAAP selling, general and administrative expense

26

%

25

%

GAAP operating margin

25

%

28

%

Share-based compensation

7

%

6

%

Fair value adjustment in inventory acquired

0

%

0

%

Upfront and milestone payments related to licenses and collaborations

2

%

0

%

Amortization of purchased intangible assets

9

%

9

%

Change in fair value of contingent consideration

0

%

1

%

Non-GAAP operating margin

43

%

44

%

ALEXION PHARMACEUTICALS, INC.

TABLE 4: NET PRODUCT SALES

(in millions)

(unaudited)

Three months ended

Twelve months ended

December 31

December 31

2016

2015

2016

2015

Soliris

$

749

$

689

$

2,843

$

2,591

Strensiq

71

12

210

12

Kanuma

11

—

29

—

Total net product sales

$

831

$

701

$

3,082

$

2,603

ALEXION PHARMACEUTICALS, INC.

TABLE 5: NET PRODUCT SALES BY GEOGRAPHY

(in millions)

(unaudited)

Three months ended

Twelve months ended

December 31

December 31

2016

2015

2016

2015

United States

$

354

$

273

$

1,257

$

951

Europe

244

222

961

841

Asia-Pacific

85

73

318

276

Rest of World

148

133

546

535

Total net product sales

$

831

$

701

$

3,082

$

2,603

ALEXION PHARMACEUTICALS, INC.

TABLE 6: CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions)

(unaudited)

December 31

December 31

2016

2015

Cash and cash equivalents

$ 966

$ 1,010

Marketable securities

327

375

Trade accounts receivable, net

650

533

Inventories

375

290

Prepaid expenses and other current assets

260

208

Property, plant and equipment, net

1,036

697

Intangible assets, net

4,303

4,708

Goodwill

5,037

5,048

Other assets

299

228

Total assets

$ 13,253

$ 13,097

Accounts payable and accrued expenses

$ 572

$ 460

Deferred revenue

37

21

Current portion of long-term debt

167

166

Other current liabilities

23

6

Current portion of contingent consideration

24

56

Long-term debt, less current portion

2,888

3,254

Facility lease obligation

233

151

Contingent consideration

129

121

Deferred tax liabilities (1)

396

529

Other liabilities

90

74

Total liabilities

4,559

4,838

Total stockholders' equity (1)

8,694

8,259

Total liabilities and stockholders' equity

$ 13,253

$ 13,097

(1)

In March 2016, the FASB issued a new standard intended to simplify
certain aspects of the accounting for employee share-based payments.
We elected to early adopt this standard during the third quarter of
2016. The adoption of the new standard requires recognition of
excess tax benefits regardless of whether the benefit reduces taxes
payable in the current period. As a result, $238 million associated
with previously unrecognized excess tax benefits was recorded as a
deferred tax asset and an increase in retained earnings as of the
beginning of 2016.